Quick Summary

Overtime in Latvia is expensive by design: 100% surcharge (double pay) for regular overtime, 200% surcharge (triple pay) on public holidays. Legal limits: 144 hours per 4-month period, maximum 48-hour weekly average including overtime, minimum 12 hours between shifts. For EUR 2,000/month employee (EUR 11.36 hourly): regular overtime costs EUR 22.72/hour, holiday overtime EUR 34.09/hour. Common employer mistakes: not aggregating overtime across multiple jobs, misunderstanding surcharge percentages, poor time tracking. Alternative: compensatory time off at same multiplier rates. Overtime is mandatory when work exceeds standard hours unless employee agrees to time off instead.

An employee stays two extra hours to finish an urgent client report. Those two hours cost the employer not EUR 25 (their regular hourly rate) but EUR 50. And if that report happens to be due on November 18th -- Latvian Independence Day -- the bill becomes EUR 75 per hour. Overtime in Latvia is not just expensive; it is structured to be deliberately expensive, by design, to discourage the practice.

Yet nearly every employer uses overtime at some point. Understanding the rates, limits, and rules prevents both compliance headaches and budget surprises.

The Cost Structure: 100% and 200% Surcharges

Latvian labour law prescribes two overtime rates:

Situation	Surcharge	Total Pay
Regular overtime (weekdays, weekends)	100%	2x normal rate
Overtime on public holidays	200%	3x normal rate

"Surcharge" means on top of the regular rate. So 100% surcharge equals double pay, and 200% surcharge equals triple pay. This is occasionally misunderstood by employers who interpret "100%" as paying the regular rate -- it is not. It is the regular rate plus 100%.

Calculating the Hourly Rate

For employees on a monthly salary, the hourly rate is derived from the monthly salary divided by the standard working hours in that month.

Example: Employee earns EUR 2,000 gross. March 2026 has 22 working days x 8 hours = 176 standard hours.

Regular hourly rate: EUR 2,000 / 176 = EUR 11.36
Overtime hourly rate (regular day): EUR 11.36 x 2 = EUR 22.72
Overtime hourly rate (public holiday): EUR 11.36 x 3 = EUR 34.09

Ten hours of regular overtime in that month: EUR 227.20 extra. The same ten hours on public holidays: EUR 340.90.

(Note that the standard hours vary by month. February with 20 working days yields a higher hourly rate -- EUR 12.50 -- than March. Overtime in short months is, per hour, more expensive.)

Legal Limits: When "More Hours" Hits a Wall

Overtime is not unlimited. The Labour Law sets clear boundaries:

Maximum overtime: 144 hours in any 4-month reference period
Daily limit: Working time including overtime may not exceed an average of 48 hours per week over the reference period
Mandatory rest: At least 42 consecutive hours of rest per 7-day period; at least 12 hours between shifts

An employee who works 20 hours of overtime every week would hit the 144-hour limit in just over 7 weeks, leaving the remaining 9 weeks of the 4-month period with zero permitted overtime.

Who is exempt: Senior managers (those who independently organize their work and report directly to the employer) may be excluded from overtime limits by mutual written agreement. This does not eliminate overtime pay -- it only modifies the hour caps.

Who cannot work overtime at all:

Pregnant employees (without their explicit consent)
Employees under 18
Employees whose health condition prohibits it (with medical documentation)

The Overtime Agreement Requirement

Here is where many employers slip: overtime is not automatically authorized by necessity. The Labour Law requires that overtime be agreed upon in writing -- either as a general clause in the employment contract or through a specific order for each overtime event.

Simply expecting employees to stay late because "the work requires it" does not constitute legal overtime authorization. Without written agreement, the employee can refuse, and if they do work, they can later claim the overtime was unauthorized but still demand double pay.

In our practice, we recommend a standing overtime clause in the employment contract combined with a simple internal order system for tracking each overtime event.

Night Work and Weekend Premiums

Distinct from overtime, certain time periods carry their own surcharges:

Night work (22:00-06:00): Entitled to a reduced normal working week (no more than 7 hours per shift instead of 8), or compensation at a higher rate agreed in the employment contract or collective agreement.
Weekend work in a standard schedule: If an employee on a Monday-Friday schedule works Saturday, this is either overtime (with the 100% surcharge) or a schedule change (which must be agreed in advance).

These can stack. An employee working overtime on a public holiday that falls at night could theoretically trigger multiple surcharges -- though the Labour Law caps the total at the public holiday overtime rate (200% surcharge).

Record-Keeping: Non-Negotiable

Employers must maintain working time records for every employee. These records must show:

Start and end time of each working day
Overtime hours worked
Night work hours
Public holiday hours

The State Labour Inspectorate (VDI) can request these records during any inspection. Inadequate record-keeping is itself a violation, separate from any overtime payment issues. Fines for labour law violations can reach EUR 2,900 for legal entities.

Alternatives to Overtime

Smart employers look for alternatives before authorizing overtime:

Compensatory time off. The law permits granting paid time off instead of the overtime surcharge, but only if the employee agrees. The base overtime pay must still be paid; only the surcharge portion can be converted to time off.

Shift work. Restructuring schedules to cover extended hours through shifts rather than overtime eliminates the surcharge entirely (provided shift schedules comply with rest period requirements).

Temporary workers. For predictable peak periods, hiring temporary staff can cost less than paying overtime to existing employees -- especially when employer VSAOI (23.59%) applies to overtime earnings as well.

Frequently Asked Questions

Can overtime compensation be replaced entirely with time off?

No. The base overtime payment must be paid in money. Only the surcharge portion (the "extra" 100% or 200%) can be converted to compensatory time off, and only with the employee's explicit agreement. For example, if overtime is EUR 20 base + EUR 20 surcharge, the EUR 20 base must be paid in cash, while the EUR 20 surcharge could become paid time off instead.

How are overtime rates calculated for employees with variable monthly hours?

For employees with irregular schedules, calculate the average hourly rate over the past 3 months. If less than 3 months of data exist, use available data or the contract rate. For commission-based employees, include average commission earnings in the hourly rate calculation. Document the calculation method for consistency and VDI compliance.

What happens if an employee works overtime without authorization?

The employer must still pay overtime compensation even if the work was not authorized, provided the work was performed and the employer knew or should have known about it. However, unauthorized overtime can be grounds for disciplinary action. Employers should have clear overtime authorization procedures and time tracking systems to prevent this situation.

Are there any exemptions from overtime pay requirements?

Limited exemptions exist for senior managers who set their own working schedules and certain specific roles defined in legislation. Most employees, including supervisors and middle management, are entitled to overtime pay. The exemption is narrow and fact-specific - when in doubt, pay overtime. The cost of non-compliance exceeds the cost of payment.

How does overtime interact with annual leave and sick leave calculations?

Overtime payments are included in calculating the average wage for vacation pay and sick leave benefits. This means employees who regularly work overtime receive higher vacation and sick leave payments. For budgeting purposes, factor this multiplier effect: overtime not only costs more per hour but increases future leave-related costs.

Keep Overtime Compliant and Under Control

Overtime calculations, documentation, and VDI compliance add layers of complexity to monthly payroll. CORVUS ACCOUNTING & TAX integrates overtime tracking into our payroll services, ensuring accurate calculations and clean records for every reporting period.

Get your overtime payroll right -- contact CORVUS →

Overtime Rules in Latvia: Rates, Limits, and Calculations